tv In the Loop With Betty Liu Bloomberg October 6, 2014 8:00am-10:01am EDT
itself into. we are going to give you all the new strategy. that is breaking this morning. espn and timed warner are renewing their contracts to renew nba contracts. we will give you the details on how much it is going to rake in over the next decade. is grilling over the government takeover of aig during the financial crisis. here is a look at the top headlines of this morning. hewlett-packard has announced plans to split itself in two be personaless will computers and printers.
both companies make devices. they also work with hospitals and drug management. this is another big m&a deal in health care. investors like that surprise and result. the brazilians rallied and stock rose in frankfurt. we are keeping one eye on an emerging market. hewlett-packard is splitting into. take- meg whitman will control the enterprise business. cory johnson is up early for us. he joins us from hp's headquarters. leo hindery is with me for the hour. former chairman and ceo of the yankees yes network.
you know this company inside and out. has said, meg whitman she is not splitting the company. why this turnaround? one could argue that she got the job because of the last attempt to split the company. are, all these years later. they continue to spend money in acquisitions. the turnaround has not happened. it is apparently not happening. they are not going to split it. pcs're going to put the into one division and the rest of the company into another division. alto, this was the first garage startup, they are fighting another way to cleave itself into. >> how is this going to work?
>> we will see if it works at all. they areounds like going to do a distribution of shares. the current shareholders will be issued shares in the new company and the old company so they can do what they want with those two different pieces. some of the parts will have greater value. they have been through this before. they spun off a division in 1999. that was one of the biggest in silicono ever valley. it was an important way for this giant company to split itself. they thought this would fix itself for ever. -- forever. here we are again. they are struggling under meg whitman in making this decision
yet again. >> i think you might remember what was going on back in 1989. >> i remember hewlett and packard personally. i was friends of theirs. corey can do this better than me. there is so much to the story. this is a decade of mismanagement. we need to talk about the thehase of compaq which but pcs into hp. this was a declining business. he was berated for his strategy. he was a miserable manager. what is fascinating here is you take a no growth piece like pcs take the eastyou that meg is going to stay with. corey could do this better than i.
there is a lot of parallels between yahoo! and hp. they been spending money trying to figure out some way to buy growth. >> this acquisition or that acquisition. >> they failed. marissa and meg have not have any success. the bet is that the piece she stays with is higher growth and she will keep it very well capitalized. she will keep a checkbook. she will keep betting and petting and trying to find new growth. ofthis comes on the heel ebay spinning off paypal. there is talk of microsoft breaking off. people look at ibm. you're starting to look at some big tech companies that grew up in the 90's and maybe they are too big? think it's a size
issue. i think it's a fit issue. , wee of us who are older remember that mergers just to merge make no sense. paypal, and next to don't belong together. these pieces that are splitting today do not belong together. there will be others. marissay that is fun is mayer over at yahoo!. >> i don't think ebay is a corollary. i know people are talking about that. buy it, may be public shareholders will buy it. we can't sell this unit to any other business. the important thing to remember is this was the week that meg whitman had to put up or shut up. she has been telling analysts , don't worry.
business is going to get bigger. if analysts are like business is getting better, why you laid off more people? she says that she will tell them in october. everybody on wall street was waiting for something big to happen. i don't know that anybody knew this would be the big thing. about making the company bigger or better, it is just about changing the goal post for meg whitman. >> if you don't have a story to tell, make up a story. forory johnson, thank you joining us. >> speaking a marissa mayer, the yahoo! ceo is moving and shaking. she is close to investing in a snapchat.
yahoo! is the lead investor in the financing for this company. they make a mobile app that sends photo messages that disappear instantly. she is trying to build up yahoo! products in mobile and messaging. the suggestion is she should either break up yahoo! or combined with a smaller aol. tom giles is joining us. ,, break it down for us. why would she be interested in snapchat? >> it is a very popular application in -- with young people. revenue and profits are overrated. i'm only half kidding. yahoo! needs eyeballs. it needs to be yellow than -- relevant. it is not that right now.
snapchat gives them an investment in the entry level with the new generation of people that are using the internet differently in a way that yahoo! has failed to yet it's had around up until now. >> why are you so down on marissa mayer making acquisitions. mark zuckerberg has a business that is successful and profitable and he is edging. marissa mayer thinks that she vc the job as head of a firm. thesekes these bets as if are her modus operandi. >> they don't make any sense? >> they do in a vc sense. when you run your company is if you are playing roulette, which is how she runs it, she hopes that something that she puts money on proves to be the next alibaba. the only success today is not her success.
he left her with the residual alibaba shares. she has done almost nothing to improve the core business of yahoo! in all of the time that she has been there. of not seeing revenue go in the direction it needs to go into. what happens with alibaba, she does have a much larger kitty to choose from and to draw upon to make those bets. i think to your point, she can't be a vc. the seas, ford to go in for the long haul. make multiple investments and hope that one or two pan out. >> that is usually what happens. >> you can wait for the long haul. does not have that luxury right now. >> she does have this cash windfall. shareholders are
saying are you the one to invest that money? with your resume and your coppice meds to date, shouldn't i be the investor of that money? gives some of that back to us. >> they a promise that a big chunk of it will go back. >> the windfall is something like $9 billion. half of that will go to the shareholders. they will be happy that they get half of that money. >> thomas wright. there is a fundamental difference between avc investor. prototypical venture capital fund, this is a shareholder owned public company. >> should she merge with aol? >> aol is not the answer. what she is doing is not the answer. she needs to shut the door and say i am the ceo of yahoo!. how do i fix and improve the business of yahoo!?
if she sees corollary acquisitions, have them make sense. yahoo!,u were running what would you do? how would you reinvest in the business? that core business is declining. would have done the microsoft merger years ago. i would've taken the money and run. by that point, google had matured to a point where facebook was steaming along and it was irresponsible not to do that. >> a lot of investors feel strongly that she should have done that. she was not around the time. that was a missed opportunity. they have $10 million to do it. >> i think she loves being ceo of yahoo! and dressing the part. be a ceo. >> you didn't like her vogue cover? it was turned upside down for
paulson today? >> we have hank paulson today and tim geithner as soon as tomorrow. it is going to be a fascinating scene to see hank paulson and these other two up there on the witness stand. they have talked about these cases before. they have defended the decision to defend aig. they had to know to save the financial system. that has been the argument all along. they will be pressed on the details of the deal. 80%decision to take the stake in aig. the federal did that in exchange for the learned. alleges that the government had an extortion rate. they charged 14%. they did not charge that to anybody else. they did not have the legal right to take that equity position.
they are in court with david boys, the famed litigator arguing on greenberg's behalf. the you think hank greenberg has any leg to stand on here? >> i think he is trying to save his reputation and his position in his prior company. this was such a fuzzy. there were no rules. for the court to suggest that there was clarity, that there was these hard and fast rules that needed to be followed and were not, that is not going to happen. these guys were playing it by ear because the crisis was acute in real. could they have done it better in hindsight? all of it could've been done better. they tried hard to do the right thing for the country. rate? the right interest
i don't know. >> it clearly wasn't. thattom baxter admitted interest-rate was a loan shark type interest-rate. it did put aig up against the wall. >> that was one individual's perspective. these three men thought it was the right rate or they should not have done it. no judge is going to try to split the baby so precisely. hank is aggrieved. he got pushed aside and lost his company in the process. i don't see a court in the world holding to the precision that he would need to win. say,was just going to leo's take is interesting. if you watch david boys in the he makes the point
that the rule of law still applies in this country. this was an illegal taking of personal property and those rules still do apply, even a crisis. that is one of the issues. even though a lot of things were moving at lightning speed, that doesn't mean that the legal issues are central. david will argue thoughtfully and cogently. >> he is not going to take a case he thinks he is going to lose. >> key is a friend of hanks and he is getting paid a fortune. -- law, why did bear get bailed and lehman get dumped? this is nothing time to revisit that david hank need? . i just don't see it happening.
on theto this point witness stand this week. is david boise going to make testimony is consistent with their depositions? >> they all did depositions that have been sealed. she is going to use their own words against them. in geithner's case, there is a book he can use. they are both detailed their positions in this sequence of events. he is going to go over that with a fine toothed comb. at the end of the day, the government's case, even if they did a few things wrong, the end result was that aig was better off with the bailout. hank greenberg cannot show that he suffered harm. >> thank you so much.
>> you are watching "in the loop ." we are streaming on mobile and at bloomberg.com. here is a look at the top headlines. things are getting back to normal in hong kong. student leaders and government officials held the first direct talks last night. euro disney shares plunged the most in six years. they agreed to a funding deal. a 1.25me park announced
billion dollars refinancing plan. $150 millionis this year. attendance and spending falls. itsoin has dropped to lowest level of the year over the weekend. it dropped 20%. there is concern of a crash. it is 26 minutes past the hour. we are on the markets. .he futures are pointing to julie hyman has more. it is time now for futures in focus. oil futures are trading above $90 a barrel. levelo a phil below that for the first time in 17 months. greg bender is here to talk
about the oil price. i want to start with you. we see this rebound in oil prices, is this given because of the dollar or other things plane into it? >> the big news last week is a arabia'sabies -- saudi discount to asia. there are not going to cut production. that is not guaranteed. we are seeing pressure on prices and the oil vick's is spiking. >> what you see in the market? is saying it is not going to act right now. how can this rebound really last? it is going to be a small recovery this week. there was that wash out last week. i look for prices to move back to that $92 level.
currently, our production levels are 8.8 million barrels a day. we are at a 28 year high. our imports are added 18 year low. we are building a lot of inventory. that is at the five-year moving average. basically for the remainder of the year. >> how are you trading that? it sounds like you think there will be a comeback. >> i would expect oil prices to move back up to the $92 level. we are risking about $3000. i anticipate crude oil to break through that. they will create a lot of stop losses. he is expecting oil to recover this week and he will be
selling it when he reaches at 92. are risking $3000. the potential profits on this trade is $6,000. do you agree with phil that we could see a move up and then more pressure on oil prices? >> this is a good risk reward situation. the market is oversold. there is a spike in volatility. that shows you some fearful sentiment. i also agree with phil. if we get above $95, you will see some salaries coming to this market. >> i want to get to our word of the week. you tend to hear this not necessarily in the oil world. that is scalping.
i think of that is something that you do with tickets. how does this apply to futures trading? >> you take a small amount of risk for small gain. historically it is popular among floor traders. now all of the screen. the scalpers are making heavy technology embarrassments to get a professed data and execution speeds. they want to get in and out of the markets very quickly. >> thank you so much. we are going to be on the markets again in 30 minutes. >> thank you so much, julie hyman. in brazilian elections, there was a surprise second-place finish. there will be a runoff. we are on the ground in some
polyp. break it down for us. how did things turn out? how did he put that victory? >> it was a surprise. inheld onto more of a lead the first round of voting. it was the closest race that was surprising. clear that she had fallen back. the third-party candidate had moved into second place. he is a former governor of the second-largest state here in brazil. results, they were a bit of a shock. the second round of runoffs between them. >> how have the markets responded so far? analysts saye
there is going to be a near-term jump in share prices. we saw petrol brands up about 18% this morning. that was a record again in a day's trading. there are people in terms of businesses and investors that are optimistic. he is far more business friendly. he is the darling of the business class. to provideeem optimism for a lot of people involved in business in brazil. >> what the two remaining candidates? what do they say? >> one of the big challenges facing the government's inflation. it is above the government's own target. this administration has had the
chance to control inflation and i have not been able to do that. one of the things he will do in his administration is put in place a princeton trained economist to take care of things like inflation and bringing that under control. there are a lot of problems with infrastructure. the urban all sorts of problems with the world cup and the lip experience that is a huge drag on the country's gdp. that has been lost to poor infrastructure. they are going to have to spend that. >> thank you so much. bigng up, the nba's paycheck is about to get even bigger. how much they will make on a new network deal? bill gross starts his new job. what will the bond king be for his new fund? ♪
>> we have some breaking news. hilton is saying it is selling the waldorf astoria here in new york city for $1.9 billion. it plans to use the proceeds of the sale to buy additional hail -- hotel assets in the united states e-reader they are selling the historic waldorf-astoria. speaking of billions, the big number is $930 million. that is how much the national best will association make from its contracts with espn and abc. that is about to double. they have renewed the pro basketball contract at twice that price. this is according to people familiar with the matter. they extended the deal. they have not made the announcement yet. they are using an exclusive
window to lock in the contract. live sports. it brings in big audiences and protects them against digital. leo hendry is with me. he was the founding chairman of the yankees yes network. this priceu make of tag that is about to be thanked with the nba? >> and is a fair price relative to the other prices that have been paid for nascar recently an nfl renewal. adam silver is a gifted commissioner. he is gifted morally and he is a heck of a leader. >> he showed that right up front. so talented. the owners are very comfortable with his leadership and should be. he negotiated the product. itt is nice about the nba is
fits into these shorter windows. we watched a lot of football yesterday. >> the eagles won it. >> so did my patriots. we watched some baseball playoff games. we watched games that seemed to last interminably. basketball fits in the window. it is quicker. it is a much more interesting advertising vehicle. >> this is a fair price? >> i worry about the key would affect of all of these prices on the consumer. i think we are reaching a breaking point. the proliferation of sports in the cost of that is having adverse impacts on customers which i worry about. inevitable? cart there will be on sports. is an attractive product
relative to the other pro products out there. adam did the typically brilliant job of bringing these two parties to the table to pay up. part of this whole package is espn has agreed and would like to be able to package some of these live games and exclusively air them online streaming. only to espnly subscribers. they will open up to the public. >> it is called over the top in various forms. what espn should worry about is the $800 million a month it gets from cable companies for couch product. think -- i am not sure. it is not as well advised as they may think. you can't have your cake and eat it too. you can't ask the subscribers to
availabley when it is in such volume over the top. i am not optimistic that will work out. as a complement to have them. >> stay with me as my guest host. we will have much more in a moment. netflix and adam sandler are teamed up to change the way you watch movies. what about movie theaters? stay "in the loop." ♪
the horror flick was a close second. they were literally connect to do see them? thoseght start seeing movies on netflix. fund anounced deals to four with adam sandler and a sequel to "crouching tiger hidden dragon." this is about putting pressure on movie theater chains. is on this. outhen a new movie comes they go to video on demand and tv channels. fromally this can range eight months to maybe as long as year depending on the heels with studios. is trying to strike that
release window. it wants its customers to get to this. that makes the service more attractive. that is one of the goals when it signs these financing deals. the shares of these theater chains fell in the wake of this announcement about these financing deals. the analysts i talked to say a dropybe we are seeing in these theater chains. is going tok this change anything when it comes to theaters,ics of movie the global marketplace has gotten so big. we are going to release it more quickly than netflix and risk china revenue from having people see it in the theater there at the regular release window. people are talking about this.
is filling a niche in the market. what has happened with the studio system, you are not seeing some medium-sized pictures get finance. netflix could fill that void. that is not necessarily conflicting with the existing system. else people should be aware of is this has been a terrible year for the movies. this is been one of the worst summers in recent memories. people are watching this closely. conventional wisdom is there is a lot of a lot lesser sequels coming out over the couple of years and there should be a bounce back in those numbers. >> this is the year of godzilla and transformers, how could it be so bad? has theater companies up in arms. four of the biggest chains are boycotting the streaming
services. nows a former executive and at popcorn flicks.com. leo hindery is also with us. is this a smart move on netflix's part? move.is a very smart the pr they are getting is a norm people are interested in what is happening. they are making a made-for-tv movie. this is been going on since the dawn of time. hbo was the precursor to netflix. hbo did the same thing back in the 80's. do was put itto on hbo and then go to theaters. that did not work. this has been done before. my belief is netflix is doing it
to expand their international base. it is too hard to produce an international series in every country. >> smarted him? -- adam sandler is about as stale as my lunch yesterday. i don't understand why people who eat food think they know how to cook food. what does reed hastings act ground question --? a nice business disturbing other people's films. profile isote -- extraordinarily high. >> have you seen "oranges the new black." >> i'm talking about feature films. you get egomaniacal and you produce a more expensive one. then you get into the
blockbuster mentality and you lose money. for every godzilla there is a lone ranger. i wrote number when dreamworks watching three of the worldst people in the reduce 65 films. only 15 made money. netflix can continue to buy product. it can -- >> you say continue what you're doing. david goes round and buys a quality product that he has watched. it has been produced. he distributes it. to produce it from green sheets is hard stuff. >> it is usually a loss leader. netflix did try this six or seven years ago.
they produced original content and it failed miserably. i think they have been around the block. i look at this as not spending big films, this is middle ground. >> if he sticks to that. smart people you and i know let their egos get in the way. it is too much fun. it is too much fun to make big films. >> and too much money. maybe there is an opportunity in these mid-range films. this is a public company. it would be so much wiser to continue to purchase product as a public company then to take the gamble of producing films. look at this. i think this is fascinating.
5% of the audience watched any type of conflict on netflix. 42% of viewers have watched a television show in september. that is almost half. can you imagine that kind of growth? >> no. him massively. he has half of the audience at his fingertips. >> why not cap to that? if you conclude that you are so clever that you can also run a production business alongside this massive distribution business, do it. this is not his talent. he will buy talent. hire somebody and that is already working for somebody else knew the end of their career. >> it sound so depressing. >> you are very harsh.
bad business for public companies. max would you make your own original content? >> i would stay clear of it. i am not a creative visionary. i stick to my knitting. i don't lose. that is what we do and we have always done that. leo is correct. this business is littered with people who think they know better than everybody else. just remember the lone ranger. $300 million. >> thank you for joining us. we'll be back. ♪
>> we are about 30 minutes away from the opening bell. the s&p is coming off its best year in almost two months. hewlett-packard is that it itself into two companies. the personals on computer and printed industry. thejob cuts on the way at largest mortgage lender in the u.k.. this is the most in three years. it is the tale of two attack turnarounds. shares of hewlett-packard are
gaining after they unveiled the plans to split into two. itso! is continuing acquisitions. they are bines that jet. fromng me is cory johnson hp headquarters in palo alto. this look like? i'm here in palo alto. the twothe first of guys in a garage startups and technology. latewas back in the 1930's. this company has struggled so much. they are returning to this idea of splitting itself and hoping some of the parts might be a stronger company. ever since the first laser thiser was released, principle source of cash flow
has been selling printers and ink and paper. this is not the dominant form of profits for the company. it is an important part of the business. they hope to separate that and focus on the high revenue of data storage and other things. they want to grow a new hewlett-packard. meg whitman is moving the goalposts. she said all year long she is going to tell you have the company is going to be successful. she had to wait until october. that date is later this week. we have a very different story to tell investors and the community of hewlett-packard employees. three stuttering and layoff costs continue to spiral. they are going to lay off 55,000 workers. we thought this was only going to be 10,000 initially. is a little bit
richer when she has restructuring costs. her bonus package is a pre-restructuring costs. the bigger the layoff, the more she makes. discussed, she had talked for so long about not splitting the company. now she is. why haven't shareholders pushed her on this move. leo seems to think this came too late. unfair, she got the job because of the botched attempt at a sale that was undertaken by the prior management. that was not a successful process. she has been trying to sell this division.
she has some big acquisition targets. they were in discussions about a possible as this combination. she is been trying to some sort of big change in the company. i stood out here 10 years ago when carly the arena was trying to do the same thing and acquiring compaq. there have been a lot of attempts to sell off divisions or being -- doing big acquisitions. they have spent tens of billions of dollars over the last 10 years on acquisitions. topline has barely budged in spite of all the billions of dollars spent in acquisitions. >> i want to switch to another topic. let's talk about marissa mayer at yahoo!. snapchat,sition of you heard leo as well.
of being aher glorified venture capitalist. she is not running the company properly. is that fair? acquisitions are ways that companies grow and success. you can't overemphasize how much important hewlett-packard is. they were engineers who started their business in a garage. they were stanford engineers who started a search engine for the stew thing called the internet and started yahoo!. these guys were inspired. the yahoo! founders were inspired by the founders of hewlett packard. they have done lots of acquisitions to grow the business. yahoo! has struggled mightily. they have made some occasionally brilliant acquisitions. they made an investment in google but they managed to botch
that investment. growtht has that kind of metrics that we have rarely seen in silicon valley. this is a kind of exciting thing has people interested. you can see why yahoo! would want to attach themselves to that rising star. >> are they spending too much money? i wouldn't do it. it seems ridiculous. if you attach revenues to it, it might mean something. you have to have a dream. no logical process the kitchen get you to a $10 billion valuation. we don't know the terms of the deal. thee could be recess where
investors are guaranteed they won't be crammed down in terms of their percent of the company they are acquiring. we'll know if that is the case. that is a hefty valuation on a business model that doesn't really exist yet. >> thank you, cory johnson. moving and shaking this hour, adam silver is cashing in on the networks love affair with live sports. disney and time warner have renewed their contracts. he became commissioner in february. the league brought in $930 million in tv rights. the new deal is about twice that amount. it covers live broadcasts. up, is bitcoin headed for
covering all the latest in washington and around the nation. that profile. foras an eventful weekend gold and that going. gold tank and bitcoin suffered its biggest decline since november last year, it fell 2% over the weekend. >> i have surprised that you referred to gold as currency. fu and matt miller are joining me for more on this. let's start with gold. it has been on a decline for the past 18 months. >> it has been on a fairly steady decline. trip remarkable to see the it has taken.
it did spike up in mid-march because of the ukraine and russian tension. it made another attempt in july. it has declined since then. today it is stabilizing the bit after reaching 1183. that coin was down 20% over the weekend. >> it has been declining for almost a year. i think it was november when we hit an all-time high of almost $1200. over the weekend it came down below 300. there is a great video of a big of 30,000ting rid bitcoins in foreign half minutes. it's interesting to see the price. backup -- back up.
it has been in steady decline over the last year. 2013, itok at it since started off the year for $12. it is still substantially higher. don't you still have bitcoin in your e-wallet? >> i still have some that i hold. i lost the password to that wallet. i bought back in november and december. i lived on bitcoin for a couple of days. >> you but at the high. >> i'm not so concerned about the price. i am concerned about it as a technology. bill gates is been talking about bitcoin over the last week. upswing, a lot of people think that the price was not the most important part to them. >> people are talking about how -- there is talk of regulation.
>> is selling for the same reasons. this is about balance sheet. the money printers are why people get into these alternative to the dollar. the u.s. dollar continues to climb. that is not going to be a huge factor for most bitcoin investors. most them are not big institutional guys. they are not giving respect to these currencies. the gold front, what are people saying about projections? >> they are looking for to stay below $1200. all of those forecasts protected to stay below. about 12% down. this is well below $1200. this is what matt was saying. the market will increase because
>> we are continuing to digest the jobs report from friday. for creating some new jobs, why are wages falling? that is a question for mike mckee. why? >> i wish i had a good answer. this revolves around supply and demand. demand goes up and supply goes down and the price goes up. but we saw last friday is demand is going up. the supply is going down and the price is going down. this is not supposed to happen. hourly wages fell by a penny in
september. that is a conundrum for janet yellen. she has said it is time to raise interest rates when wages rise. created almost one million jobs in the last four months. -- peopleoyment rate are not coming into the labor force. the participation rate is still falling. relationshipl between wages and workers has broken. workers continued to go up and demand went down. did not go down. does yellen keep rates low in the hope that that happens? maybe there is less slack in the labor market than she thinks. that is a question for the fed. >> there is no right answer.
>> that is the bottom line. there is a big debate. if we are this close to full employment, maybe we are not this close to full employment. the fed says it is about 6%. goldman sachs is out with a piece. normally the fed would be tapping the brakes now. they would be saying it is going to happen sooner than many think. we will have some clues minutes from her mother. by them.l be speeches -- a lot of chatter a noise going to get. we are just a few minutes from the opening bell. we have the top 10 stories you do not what to miss.
>> welcome back. i am betty liu. we are on the markets. this is the final moments before the opening bell. we are coming off one of the best days so far in the last few sessions. report came in a little bit mixed. the jobless rate fell to a six year low. we are on the markets in 30 minutes. 10's count down to the top stories you need to know. julie hyman and scarlet fu or join me.
number 10, hilton is selling the 1.9 billionria for dollars. they plan to use the money from the sale to buy additional hotel assets in the united states. they will manage the hotel under a 100 year contract. colgate palmolive has been downsized. says it expects the revenue growth to be only slightly better. eight, the bio pharmaceutical is working on a treatment for ebola. the fda.in talks with this is julie's favorite restaurant. number seven is a buffalo wild wings.
upside.any has limited target. the rice >> wings are all about alix steel. that is where she will be. we need to get her back. >> number six, care fusion. they will buy the technology company in cash and stock. the deal is expected to close the first half of next year. that is a 26% premium. the five, radioshack. they are plunging in the premarket. financingy reached a deal with a group of lenders. it is definitely more this year. >> this is only putting off the inevitable. >> are you going to do any
holiday shopping at radioshack? >> i haven't since i was 15. >> number four is aig. to justifywill have bailing out aig. number three is yahoo!. marissa mayer is close to investing in snapchat. $10valuation will start at billion. investors.mes from >> number two is h&r block. the sale of the banking unit is slowing down. the deal will not be completed this year. it will continue offering financial service relics to clients during the coming tax season. number one is hewlett-packard.
they will split into. today is splitting monday. the pcs and printers will make up one business. that will be a very key part of the business. markets are kicking off trading week. while goldman they should have rushed to anticipate a rate hike anytime soon from the fed. blackrock thinks the opposite, that the fed could hike rates sooner than expected. , chad morgan,ere joining us, a portfolio manager who believes we still have a long road ahead. where do you stand, exactly, on the fed hike? >> i do not think it will move into the second half of 2015. inflation expectations are coming down right now. you have close rates in the in
-- in the overall side, it looks robust, but we still have a ways to go. the underemployment rate is still elevated. until you see one to one and a half percent on employment rate, it will stay on. the was looking on breakeven rate for the tenure. over the next 10 years. how does that project onto corporate ornate -- corporate earnings and the pricing power? >> pricing power is a strong issue. activitys inflation there looking at all has to do with the financial markets. in the business world, inflation is moving along at 2.5%. when you come to financial products, it is all about the financial system.
here is the thing. when they came out and showed dots again and said, 2017, we're andg up to 3.5 and we will in two thousand 16, he start to see inflation expectations. what happens is they will a hawkishlong statement they're making but eventually, they will have to readjust and say, we will have to hold off. >> one of the things that could eventually put upward pressure is wages start to increase. one of the things that could up -- could put upward pressure could come from the government. the president is pushing congress to consider that an four states, which contends to be more conservative, including arkansas, will be considering minimum wage increases. i know you like big box as an investor,
do you have to game that out, whether we will see these increases? how does that play into your strategy? strategy, fuel costs have gone down quite a bit. that will have positive implications. when it comes to wage pressure, we will not see it. i think it is a nice headline story but unfortunately, i think it will not affect walmart in the least bit. absorb it? >> i think so, honestly. 5%, and 5.5%. they always have and they always will. be positive for walmart will fuel costs plummeting. >> it will hit martin -- margins and be the stronger dollar for these companies. >> yes. you will start to hear about that in conference calls this
quarter. we expect revenue growth to be roughly 3% and earnings growth at 5%. fromill hear a message throw aionals that will wet blanket on revenue growth. numbers they015 have, they will have to bring them down quite a bit. >> with a rather the in small cast because of that effect? >> no. you want to move up the quality spectrum at this point, even though we are still bullish, we -- is the lasts place you want to be. at the real high-quality companies that have consistently grown and are consistently profitable. >> so you try to avoid at least
some of that? >> at this point, you want to do exactly what you're saying. if you are a us-based investor. with that in mind, it is pretty good and pretty cheap overseas in the european market. you may want to look their. why we have not heard more ceos talk about the stronger dollar? are they prepared? have they hedged well enough? >> i do not think you can prepare, to a certain extent. i think the message, you will hear it this quarter and it will be very clear and obvious that to 115u.s. dollar goes versus the euro, topline growth to bottom line growth. right now, overall markets look fairly valley -- married.
>> all right. great to see you. thank you very much. coming up, bill gross officially starts managing his new bond fund today. we will look at the challenges he faces. the big story of the morning, hp is announcing it will split into two. we will stay on this with full coverage already trending on twitter. ♪
did you see this movie, the top at the box office this weekend, based on the best-selling novel -- novel? it attracted a mostly female audience. film, annabelle, right behind in second place with $37 million. catch all the latest in tech and media only on bloomberg west. this is like a movie, bill gross starts his new job today, where he will run the company's bond fund. pimco, thewn from firm he founded 40 years ago. of the what he thought
departure. >> i was surprised by what i was not surprised about was that they were able to draw on a deep bench of talented people who established track records and have industry awards and who are part of the protests. bill's departure and how it happened was a surprise. what was not a surprise was the incredible bench and very strong team. i work with these people. they are superb. >> so he is in a good -- in good hands. covers pimco for us and joins us now. hearingf, what are you about money flows? >> it is an open question. people have an eye on this here
it one of the main things people are debating is the size of the funds. is that an asset or a liability for him? he draws ideas from the traders over here and over here. to what extent with one trader will he record clay whatever performance he has enabled to have with a smaller fund? if you're going to change your money over, you want to commit to that. if you are looking at a 70-year-old bond trader with only one, that is not setting off the infrastructure you might want to see. classes not. how are you exactly going to position this with new investors? >> it sounds like he will have a lot of the same ideas. think his perspective on the
markets will be largely similar. it will be through an unconstrained lens. a little more flexible and less on the treasury. >> you just heard mohammed say he believes pimco is in good hands. risk -- thehe return fund? and how are those hands on that fund now question mark >> the main concern i hear right now is you have three guys running that fund. when it comes down to it, having with those funds, it is stressful. makeo not know who will that final call. like you willms have war factions. these guys are competitive and ambitious and very smart.
what happens now is an open question. >> you know how he is received so far? >> they are excited and they know they have a big celebrity and they wanted to make a splash and he is certainly doing that. i think they are stoked. >> thank you so much. still ahead, exciting news. guest, the former presidential candidate, mitt romney. we will have a preview coming up next. ♪
legalizing gay marriage. they're calling for a nationwide ruling on same-sex marriage. i want to get the opinions of our two new colleagues. they are joining us ahead of tonight,ut program "with all due respect." .ou have one exciting guess do you want to take a stab? this device predations. >> it allows lower court ruling. eventually, it basically remains with the states and there'll be more federal communications but it is a state -- t in the states has been
>> i am feeling inequity here. where are comfy chairs you guys are sitting on? >> there are holograms and sitting on milk crates. >> always a chair for you. you have a special guest tonight who will be sitting in one of those comfy chairs, mitt romney. >> he will be sitting in one of us chairs, off-camera earth -- currently. we are exciting -- excited. >> you are out today. a very interesting read this morning about jeb bush. there is debate about is he or is he not going to run or president? in your piece, you know even he has not decided. >> maybe some people find the conclusion of my reporting anti-climactic. i have been struck in the last weeks about
people coming up with me saying, jeb bush is in and he is running any as not announce it yet and other people of any definitively that he is out. i talked to over a dozen people who know governor bush right now and in fact, he is still thinking about it, not just could i raise the money, but just interest actively, does he want to do this, does he want to put his family through it, does he want to take a republican party with which he is a little out of step on some issues. >> i think he is 100% right here in -- right. week president bush saying he spoke to his brother about this and he was in favor of jeb bush running for president. bush is now removed from -- negative to the idea of being neutral. a big move an important player
to the family, as we all know. >> do not get too excited on a bush-clinton race yet. on another note, nancy pelosi, i watched this segment this morning. you asked about all the top issues erin the top of the top is you talked about her ice cream habits. >> she's chocolate ice cream three much every day often for breakfast so we decided to have her into taste a little bit and we did a blind taste test here it -- test. chose the one that probably got the best buzz on the internet, based in ohio, but we got some ideas in manhattan for her. >> of the people, that is what it is all about. thank you so much for joining us. make sure to catch the debut of their program tonight.
stocks continuing gains today up about 4/10 of 1% across-the-board as we see a more positive sentiment continuing at least for today. take a look at what is owing on the bond market as well. a little bit of a make picture but really not much has changed here. 10 year picking up very slightly but still at 2.4% area still pretty low levels. let's talk about what is going on today and what we can ask that through the week with stocks and bonds. i am joined by a couple of colleagues at bloomberg news. you, i want to start with because we saw that volatility last week day by day. bigger moves than we have come accustomed to more recently. >> if you look historically, october is a scary month. some of the biggest crashes we have seen in the stock market, 1987, years etched in investors
memories forever, 2008, which may have just in the clinton's timing, but october is the month where people get nervous. look, i would expected to continue through october, but he called it a brush fire and not a forest fire. a lot of strategist are saying, active fund managers are trailing behind. half trailing the s&p 500 this year. expectation of chasing a rally through the end of the year. >> cash appeared on the fixed income side, there is a -- a big debate that has to do with the fed. we have got lack rock and .oldens -- goldman sachs >> goldman sachs is saying you probably have more time to really explore riskier debt and invest in bonds and not worry about rates rising so quickly. you have got blackrock saying
the fed will hike rates sooner than you may think. >> what is sooner? onthere a more precise point it? >> the question is when next year. it is ansys is they will hike rates at some next year. early would be the first quarter and late will be the fourth quarter. the pace of how quickly they hike rates is key going forward. a quick pace of rate -- rate -- s fundamentally, the fed is looking at data right now to see economic data to see how they and keep thes economy while not cooling it too much. you also have a dynamic where the potential for a rate hike has also caused the dollar to increase in value, which could stymie growth in the u.s. which could prolong the use of zero interest rates policies. these things are causing a little more volatility and more disagreement among the guests investors.
>> on the question of the fed and talking to various investors on how much are they paying attention to the fed right now in calculus investing versus geopolitical events versus the dollar? it was a fascinating reaction to the jobs report on friday where we reverted back to where good news is good news again. that happened after a strong selloff in docs after it left us over so it -- oversold. it was a reaction to see a good and strong jobs number. they are comfortable with the middle of the next year beginning to tighten. the dollar is the big wild card now. if the dollar could cause possibly deflation going forward, people are talking about that. it is a tough battleship to turn around. >> we have got to leave it there. always good to talk here you.